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2013 property forecast - what's next for property in Yorkshire?

Tuesday 4th December 2012

Residential property prices in the UK fell for the fifth consecutive month in November, dipping by an average of 0.1%, according to property analyst Hometrack.

Property values dropped in all UK regions, apart from East Anglia, with even London failing to be sheltered from a downward turn in the property market.

Yorkshire saw a marginal fall of .2% month-on-month in property prices, compared with a 1.2% decline in Central London – the sharpest decline in property prices in November.

Despite the negative figures revealed by the survey 1,500 of estate agents and surveyors, Mr Donnell argued that “the slowdown in the housing market over the final half of 2012 has been less pronounced than that seen over 2011”.

The latest figures from Nationwide’s House Price Index outlined that property price growth remained flat in the month to November at 0% meaning that the price of a typical home has now reached £163,853.
Robert Gardner, Nationwide's Chief Economist, argued that although the housing market has been volatile month-on-month, “the predominant theme remains one of stability” with annual price growth remaining in a narrow band between +1.5% and -1.5% on all but two occasions over the past two years.

But what are the prospects for the property market in Yorkshire next year?

Tim Morgan, director of Leeds and London based property investment business Emerging Real Estate, gives his predictions for the 2013 property market in Yorkshire.

He says: “The fundamental issue for 2013 is the regeneration of obsolete housing stock: there is a conflict between the need for affordable housing and the viability and profitability of sites, which will continue to slow down development.

“The larger cities will see a slow but encouraging increase in new-build urban apartment developments, but cautious management is necessary to meet the demands of both owner-occupiers and savvy investors.

“Needless to say, mortgage lending will dictate the pace of growth. I don’t expect any dramatic surprises – prices will either remain stable or increase very slightly depending on lenders’ attitude to funding.

“The North South divide seems to be widening with the London market pulling away due to overseas buyers in the City. By and large, however, Yorkshire’s healthy spread of industry and services means that the region is sustaining its local economy and population – and underpinning the residential property market – better than those areas that are over-reliant on sectors badly affected by the downturn.”

The experts at leading property consultants Savills believe that there will be regional differences across Yorkshire next year.

Lucian Cook, research director at Savills, comments: “There have been wide geographical differences in the performance of the housing market in the past five years, a trend which is mirrored across Yorkshire. The overall legacy of the credit crunch continues to shape the market - constrained lending conditions, a slow economic recovery and customer sentiment all continue to be key drivers.

“Our research shows that house prices should stabilise in 2013 and we are still predicting that inflation will continue to strip out value for the foreseeable future. Whether or not properties are in an equity rich area, where buyers have access to finance, is all important. We expect this ‘location is king’ tendency to continue over the next five years.

“Across Yorkshire, we are forecasting a mainstream growth of 5.5% until 2017, however we would expect those equity rich markets like York, Harrogate and the Leeds suburbs to outperform more mortgage reliant markets such as Hull, Bradford and Doncaster. Likewise, the popular villages such as those in the Howardian Hills, around York, Leeds and closer to Harrogate will also continue to fare better than others in less sought after locations. There will still be an overall flight to quality, whether it be due to location or property type, which has been witnessed across all regions of the UK in the last few years.

“Our regional economic forecasts still point to a recovery led by London and the South East. Here, housing transactions are strongest and repossession levels lowest. There are however, some anomalies. In less affluent areas such as Slough or Portsmouth, mainstream price fluctuations are more in line with the national average, at 20% below their pre 2007 levels on an inflation adjusted basis. In similar Northern places like Hull and Middlesbrough, prices have continued to drift downwards and are over one third below where they were five years ago.

“It’s worth bearing in mind that the forecasts are based on a market that’s currently experiencing low transaction levels, which is largely driven by more affluent, equity rich owner-occupiers, so this does need to be taken into account, as any change in interest rates and availability of mortgages would have a huge impact.

When it comes to the prime property market, this has generally been most affected by a lack of consumer confidence. Although as Ben Pridden at Savills York adds: “There have been exceptions to this. We have sold three homes over £2million recently, a part of the market that has been severely hampered in Yorkshire since 2007. Our experience on the ground also mirrors the latest research findings and forecasts. In fact of the seven sales agreed in the last six weeks from the York office, five of them have been either within York city centre or in the areas mentioned by Lucian to North of York”.

Matthew Jones, head of development at Savills Yorkshire, says: “Whilst it’s been a turbulent few years for the Yorkshire property market, residential development land sales, which generally predict the number of new homes coming on the market in years to come, are now thriving in the county.

“Well-capitalised national and PLC house building companies are buying sites selectively to secure their pipeline. Strongest demand is for viable, consented land. Supply shortages are creating competition and a rising market for such sites, with interest focused on well located sites in popular conurbations. Sites from three acres up to 10 acres, which have the potential of providing 50-150 houses, are seeing aggressive bidding; in some instances achieving prices in excess of expectations.”

              

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